Particular benefits: loans written off: special rules
Section 188(1) ITEPA 2003
Sometimes a loan or part of a loan is released or written off. This means the borrower does not have to repay the lender. It is also sometimes referred to as a loan being waived.
If a charge does not arise under Section 62 ITEPA 2003 (see EIM21740) a charge under Section 188(1) ITEPA 2003 will arise on a director or employee, except for 2015/16 and earlier one in an excluded employment (see EIM20007) where:
- part or all of any loan made to him (or a relative of his) is released or written off and
- the benefit of the loan was obtained by reason of his employment.
The charge is subject to the exceptions in EIM21742.
The charge is made for the year the loan is released or written off. It applies whether or not the loan released or written off was a beneficial loan the benefit of which was chargeable on the employee under EIM26101 onwards.
It may also apply when the employment has terminated (see EIM21743 and EIM21744).